Golden Butterfly Portfolio
The Golden Butterfly from Portfolio Charts: a fifth each in US total market stocks, US small-cap value stocks, long-term Treasuries, short-term Treasuries, and gold, rebalanced once a year. It is the Permanent Portfolio tilted toward growth with an extra slice of small-cap value.
Designed by Tyler (Portfolio Charts), 2015. Implemented and tracked by Tactfolio.
| Nov 2004 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 7.8% | 11.0% |
| Worst drawdown | -19.6% | -55.2% |
| Sharpe ratio | 0.91 | 0.65 |
| Volatility | 8.6% | 18.8% |
| Annual return since publication (Oct 2015) | 8.1% | 15.4% |
| Apr 1968 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 9.6% | 10.8% |
| Worst drawdown | -21.7% | -55.2% |
| Sharpe ratio | 1.20 | 0.69 |
| Volatility | 7.9% | 17.1% |
| Annual return since publication (Oct 2015) | 8.1% | 15.4% |
The Golden Butterfly is a fixed five-part portfolio designed by Tyler, the author of the Portfolio Charts website, and published there in 2015. It holds a fifth each in US stocks, US small-cap value stocks, long-term Treasuries, short-term Treasuries, and gold, and is rebalanced once a year.
The idea#
The Golden Butterfly starts from Harry Browne's Permanent Portfolio, which splits money equally between assets for prosperity, recession, inflation, and deflation. Tyler kept that framework but tilted it toward prosperity by adding a fifth slice in small-cap value stocks, a part of the market that has historically earned more than the broad index over long periods.
The result keeps the Permanent Portfolio's balance, with gold for inflation and Treasuries for deflation and recession, but has 40% in stocks instead of 25%, and it swaps Treasury bills for short-term Treasury bonds.
How it works#
- Hold 20% each in US total market stocks (VTI), US small-cap value stocks (VBR), long-term Treasuries (TLT), short-term Treasuries (SHY), and gold (GLD).
- At the close of the last trading day of each year, reset all five to 20%.
Portfolio Charts describes the stock slice as US large-cap blend; a total market fund like VTI is dominated by the same large companies.
What the backtest shows#
Over the ETF era, from late 2004, the Golden Butterfly returned about 8% a year, close to a 60/40 portfolio and well below the S&P 500's 11%. It did so with much less risk: its worst drawdown was about 20%, against 33% for the 60/40 and 55% for the S&P 500, and it had the best risk-adjusted return of the three.
Its worst drawdown came in the 2008 financial crisis, from May 2008 to March 2009, and was recovered by September 2009. That year it lost about 5% while the S&P 500 lost 37%. In 2022 it lost 13%, less than the S&P 500, as rising rates hurt both stocks and long Treasuries. It lagged most in strong stock years, gaining about 6% in 2013 while the S&P 500 rose 32%.
Since it was published in 2015 it has returned about 8% a year, with a risk-adjusted return as good as its full record. With simulated history the test starts in 1968 and returns near 10% a year, about a point less than the S&P 500, with a far higher risk-adjusted return. It gained in 1973 and 1974 while stocks fell hard. Its deepest simulated drawdown, about 22%, came in early 1980 when gold fell from its peak, and was recovered within the year.
When it struggles#
- Strong large-cap bull markets. With 60% outside stocks and a small-cap value tilt, it trails when large US stocks lead.
- Falling gold. A fifth of the portfolio is gold, which can lose value for years.
- Rising rates. Long Treasuries and stocks can fall together, as in 2022.
Using it on Tactfolio#
The live strategy above holds these five ETFs and rebalances at each year end, as Portfolio Charts assumes. Copy it to try a different small-cap value fund, or compare it with the Permanent Portfolio and the All Weather Portfolio.
Year by year
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 4.0% | 14.0% |
| 2025 | 19.8% | 17.7% |
| 2024 | 11.7% | 24.9% |
| 2023 | 12.3% | 26.2% |
| 2022 | -13.0% | -18.2% |
| 2021 | 8.8% | 28.7% |
| 2020 | 14.6% | 18.3% |
| 2019 | 17.8% | 31.2% |
| 2018 | -3.9% | -4.6% |
| 2017 | 11.1% | 21.7% |
| 2016 | 9.5% | 12.0% |
| 2015 | -3.3% | 1.2% |
| 2014 | 9.7% | 13.5% |
| 2013 | 5.7% | 32.3% |
| 2012 | 8.9% | 16.0% |
| 2011 | 8.3% | 1.9% |
| 2010 | 16.6% | 15.1% |
| 2009 | 12.5% | 26.4% |
| 2008 | -4.8% | -36.8% |
| 2007 | 9.3% | 5.1% |
| 2006 | 12.5% | 15.8% |
| 2005 | 8.1% | 4.8% |
| 2004* | -0.1% | 2.3% |
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 4.0% | 14.0% |
| 2025 | 19.8% | 17.7% |
| 2024 | 11.7% | 24.9% |
| 2023 | 12.3% | 26.2% |
| 2022 | -13.0% | -18.2% |
| 2021 | 8.8% | 28.7% |
| 2020 | 14.6% | 18.3% |
| 2019 | 17.8% | 31.2% |
| 2018 | -3.9% | -4.6% |
| 2017 | 11.1% | 21.7% |
| 2016 | 9.5% | 12.0% |
| 2015 | -3.3% | 1.2% |
| 2014 | 9.7% | 13.5% |
| 2013 | 5.7% | 32.3% |
| 2012 | 8.9% | 16.0% |
| 2011 | 8.3% | 1.9% |
| 2010 | 16.6% | 15.1% |
| 2009 | 12.5% | 26.4% |
| 2008 | -4.8% | -36.8% |
| 2007 | 9.3% | 5.1% |
| 2006 | 12.5% | 15.8% |
| 2005 | 8.1% | 4.8% |
| 2004 | 10.5% | 10.7% |
| 2003 | 20.3% | 28.2% |
| 2002 | 2.4% | -21.6% |
| 2001 | 2.0% | -11.8% |
| 2000 | 8.0% | -9.7% |
| 1999 | 4.4% | 20.4% |
| 1998 | 8.9% | 28.7% |
| 1997 | 14.0% | 33.5% |
| 1996 | 8.3% | 22.5% |
| 1995 | 22.5% | 38.0% |
| 1994 | -2.5% | 0.4% |
| 1993 | 15.3% | 9.7% |
| 1992 | 9.1% | 7.6% |
| 1991 | 19.6% | 30.3% |
| 1990 | -2.2% | -3.2% |
| 1989 | 15.5% | 31.5% |
| 1988 | 9.2% | 16.4% |
| 1987 | 4.1% | 5.1% |
| 1986 | 18.4% | 18.6% |
| 1985 | 25.1% | 31.6% |
| 1984 | 4.3% | 6.2% |
| 1983 | 11.7% | 22.4% |
| 1982 | 28.2% | 21.6% |
| 1981 | -1.3% | -4.9% |
| 1980 | 15.0% | 32.4% |
| 1979 | 38.3% | 18.3% |
| 1978 | 12.8% | 6.5% |
| 1977 | 7.4% | -7.2% |
| 1976 | 20.9% | 23.8% |
| 1975 | 16.9% | 37.1% |
| 1974 | 5.0% | -26.5% |
| 1973 | 5.4% | -14.7% |
| 1972 | 17.0% | 18.9% |
| 1971 | 13.8% | 14.1% |
| 1970 | 7.6% | 3.9% |
| 1969 | -9.9% | -8.4% |
| 1968* | -0.1% | 14.6% |
* Partial year.
The rules as implemented
This is the exact tree Tactfolio runs, rebalanced yearly with signals and trades at the close. Open it to inspect or copy it.
- StrategyGolden Butterfly
- WeightSpecified
- TickerVTI20%
- TickerVBR20%
- TickerTLT20%
- TickerSHY20%
- TickerGLD20%
- WeightSpecified
Sources and caveats
- Tyler (Portfolio Charts), Golden Butterfly Portfolio (2015)
- Portfolio Charts, FAQ (annual rebalancing assumption)
- ETFs stand in for the asset classes: VTI for US large-cap blend (total market) stocks, VBR for US small-cap value, TLT for long-term Treasuries, SHY for short-term Treasuries, and GLD for gold.
- Rebalanced once a year, as Portfolio Charts assumes for every portfolio.
- Rebalancing happens at the close of the last trading day of each year.
Common questions#
What is the Golden Butterfly Portfolio?#
It is a fixed mix of 20% US stocks, 20% small-cap value stocks, 20% long-term Treasuries, 20% short-term Treasuries, and 20% gold, designed by Tyler of Portfolio Charts in 2015.
What ETFs are used for the Golden Butterfly?#
This version uses VTI, VBR, TLT, SHY, and GLD. Similar funds, such as an S&P 600 value fund for small-cap value, can stand in.
How is the Golden Butterfly different from the Permanent Portfolio?#
It adds a fifth slice in small-cap value stocks and uses short-term Treasuries instead of Treasury bills, so it holds 40% in stocks instead of 25%. That tilts it toward growth.
Does the Golden Butterfly still work?#
Since it was published in 2015 it has returned about 8% a year with a worst drawdown under 20%. It has trailed the S&P 500 in most strong stock years. The live record on Tactfolio shows how it is doing now.